Moin from Germany,

nice number that shows how the junk market hit the wall during the last few weeks...

Eleven junk-rated borrowers have sold bonds since the beginning of July, compared with an average of 41 a month in the first half of the year, Bloomberg data show. Three found buyers in August.

And i bet the three in August had to made substantial concessions like Home Depot to unload the debt.... :-)

Reference prior comments on the big option bet in September.

Now I can think of a possible scenario.

Countrywide made a 4.5 billion dollar loan, no money down, to a foreigner with a local U.S. address, something like Clark & Addison (Wrigley Field). Whoever it is, they put it all on black in September. Hmm, wasn't there a group called Black September?

Yeah, there was an eclipse of the moon last night.

test

people bet big the wrong way all the time...ask brian hunter of amaranth...we may be working too hard to explain the "terrorist put"

only bet i have right now is on NG, which may finally have a positive open...neutral o/w on market direction...sorry to lose markm for the time being...

Seamis,,,or was that "Black Sabbath" ???

BIll, you wrote, "I think I’ll watch Bloomberg from the boat and spend my day bobbing in the harbour. I think I deserve it." You definitely deserve it! Thank you for all you do. Please post photos of your new workspace, out there, "bobbing on the water." :-)

ALOHA !!

Bill ... I was just looking at the Bush FY Budget for 2008(mid year version) and this year they have forcasted a $410bilUSD budget just for defense with a possible float of an additional $49bilUSD in supplemental emergency funds. God knows what is in their "other" set of books ... off-budget. Add them together and the USA has decided that we would rather squander $459bilUSD this year on military solutions! Thats 3.4 Kashagan oil fields in exchange for highly inflationary death and destruction of humans and fiscal irresponsibility. The repercussions of the "War On Terror" will be felt for many generations not just now and will hasten the fall of the US Empire ever faster, just as Bin Laden had planned. That is how he defeated the Russians through fiat fiscal attrition ... bleeding money ... bleeding productive wealth. At some point we won't even be able to afford to defend ourselves as a Nation much less willy-nilly invade other countries or police the US Peso!

Yesterday, I posted a portion of the 1964 LBJ tapes where LBJ discusses going to war in Vietnam. He knew it was wrong but did it anyway and 58,000 US kids died for no reason! Those tapes show just how insane our leaders have been in the past and are probably now. What will we be hearing in 40 years listening to the Baby Bush tapes about Iraq?

BB: "Now damn it Dick and Karl are you sure this Iraq invasion is gonna work? Get on the horn and call Rush ... I wanna be sure!!!!"

I am amazed that a bunch of Vietnam War draft dodgers got elected to Pres and Vice Pres in the first place! What must highly decorated military commanders from the Vietnam era think listening to the likes of Bush and Cheney talk military strategy? I think I would have to resign ... One thing is for sure the Bush administration sure has used up a lot of Generals!

Yet another hallmark of fiat regimes is the ability to fund endless wars ... See "fiat" in of itself isn't evil, its just fiat requires a highly responsible and honest egoless government to be responsible and not spend or live beyond a country's means. As long as a human being is President of a fiat currency there is no chance of that ever happening. It is not the nature of humans not to be greedy or use power. This is why no fiat currency has ever survived. Historically there have been many, many fiat regimes and they have all failed. Back during the Weimar Republic days money printing required an actual printing press and paper and ink, now with the advent of the computer and spreadsheets $1trilUSD can be created with a mouse click ... Not even the Weimar Republic could print up $1tril marks. In fact a biz friend here in Hawaii has a Weimar Mark with only one side of the note printed. That's how desperate things got! Aside from all the red flags that pop up every other day now I feel desperation in the air! I see nothing "riskless" anymore ... except gold!

The longer we voters elect leaders that continually police the World offering only military solutions to economic problems the faster we will live in a Third World freedomless lifestyle ... if we're lucky it'll be "Third"!!!

With more US$230 trillion in open derivative contracts, much of it in the form of collateralized obligations, the global financial system is bracing for massive writeoffs.

It is for this reason that credit evaporated. Banks are slashing lines of credit, paring back trading positions and refusing to roll over commercial-paper obligations because they must husband their cash. That is why a 50-basis-point cut or a 400-basis-point reduction in Fed Funds will not do anything to restore confidence. It is also the reason the markets will panic the day after the Fed's hand is forced on September 18, when they realize that financial institutions will still be unable to move the collateralized derivative structures off their books.

Basel Accords were a stealthy virus that contaminated the global financial system.

http://www.atimes.com/atimes/Global_Economy/IH29Dj01.html

Safe way to invest in gold?

5-Year MarketSafe Gold Bullion Certificates of Deposit

"If the Spot Price of Gold has increased in value over the term, you earn a Market Upside Payment equal to 100% of the percentage change in the average Spot Price of Gold, calculated as an average of ten semiannual pricing dates."

"If the Spot Price of Gold has decreased in value, you will receive 100% of your principal at maturity."

http://tinyurl.com/33bqel

And silver:

http://tinyurl.com/2mulnc

The vol. stinks and will stink until it comes back from vacation. I went to all cash till I see better vol.

Personally, I think we are bottoming for a fall run.

A double bottom off the lows of a few weeks ago would be nice.

Any thots 2nd Ave.??

Dab

What do you think 2nd? I think Peter's thesis of testing the previous low (or thereabouts) is on.

I'm sitting on my powder until I see the whites of their eyes.

I'm also in UNG with a similar basis. I have time. I sold GFI and AUY on Friday into the AM strength and have reloaded partial positions waiting for a bigger drop to load up.

dab-can't get too excited about the long side until we retest the lows...cashed out the miners and financials earlier this month...long UNG and spec holdings in KRY/BMD...o/w about 85% cash...

..so craig and i are on the same page...and yesterday i see leisa and i crossed paths again buying a little UNG around 34.03 at the open...

starting to look at NGAS-last played this one in the 7.50-7.90 range, now gapping down to 6.87...

long NGAS @ 6.84...adding to WGDFF at 2.27...

UNG: was it OG who quoted JL as adding to positions only on the way up>opened my posiltion at 41, stopped averaging down after it dropped to 36, but then couldn't resist adding some at 34...will wait for a spike back >37 from here to continue adding...OK with staying underwater for now...

Re stocks: the recent rally due to short squeeze when discount rate dropped on that friday is suspect due to; lack of Institutional stock support (net distribution into low volume buying) which is needed for bull markets AND the massive liquidity did not go into stocks (as I opined weeks ago), it went into the credit market. No institutional support along with the fed pushing on a string with regards to the stock market point to a possible retest of recent lows.

Re gold: Myth - slowing economy leads to gold bear market. Fact - a slowing economy -> lower tax receipts -> lower dollar -> higher gold price...very simple but POG can do whatever it wants in the short term. Gold longs don't need some kind of credit meltdown to profit, although if some paper failure leads to a bank failure gold should rocket higher. Is the credit situation systemic? Wish I knew who was correct on this issue.

Re European Central Bank M3 growth at 11.7%: you guys need to take some notes from the Americans in keeping your inflation "low". See; changing index calculations, hedonic indexing, substitution effect, possibly outright lying or simply drop the public publication of M3 like we did here in America...call Bernanke and Paulson, they'll help you out. Also, with money supply growth so high, will they need to raise rates to counteract this inflationary policy? Will the euro rally in usd terms?

Re bonds: the second week of June, I posted that the bond downtrend line (ief) was broken to upside in oversold conditions giving a "buy" signal in my model. It looks to be peaking, will sell on uptrend line break. Buying at 80 and selling at almost 84 may not seem like a GREAT trade in just over 2 months, but this is my best (not most profitable) trade of the year because; I stated that I didn't like bonds at the time but I stuck with my plan and bought up to my asset allocation target - lighten up at highs, go "all in" at lows - over and over again for nice gains over time. Sometimes you just need to shut your eyes and hit buy/sell and follow trade in the days/weeks ahead with possible stops put in place. Plan the trade/trade the plan. What I mean by this is that if your allocation in any sector/security/asset class etc. is a low of 20% of your portfolio and a high of 30% of your portfolio you sell down to 20% at high prices and you buy up to 30% at low prices using technical analysis with the "art" in fundamentals. If your portfolio is diversified, you will do this with many securities and will be covered regardless of conditions.

good luck to all.

NGAS - Daily chart has a H&S look to it.
MCO - Ugly chart. Death of a thousand cuts.

Interesting that the utilities are holding up better than the rest of the market, after leading to the downside yesterday.
Long UNG, MU; short UNH (via puts)

GFI is bucking the mkt....signed or is signing labor agreements in South Africa.

Bill -

http://www.anatoliaminerals.com site is unusually informative and easy to penetrate, with recent drillng report. I wonder if you will recognize any of the "jockeys".

Corporate secretary: Jay Kellerman, "over 15 years of experience specializing in corporate and securities law matters with an emplasis on the mining sector. Jay spent a year on secondment to the General Counsel's Office of the Ontario Securities Commission."

The others seem US or Brit.

2nd,
Now that GFI is due to settle with the union I suspect our premkt shenanigans will cease. With this tape it's looking like the $17+ stock it was before the labor issues.

UNG:
Gaining some strength. Some of the Septemeber near the money calls look like a good bet.

craig-you may be right about the reason for the extended hours trading prices with GFI...

UNG finally catching a bid...now up 3%

Thanks for the ABB report Bill. Much appreciated.

This market is still following the '87 crash script, in my opinion. I am watching this to define risk, not to scaremonger.

In '87 the first leg down was 10% in 28 days (calendar), almost identical to 2007 first leg down. The snapback rally in '87 was 7.8% up in 10 days. We just had a snap-back rally that was 10 days in length but only about 60% retracement.

Behavior around support at 1440 and 1370 will be critical. September is typically a tough month for the market.

I am largely in cash and short the financials waiting to see a clearer trend.

NEM:
Barrick dismisses talk of Newmont bid

http://www.reuters.com/article/marketsNews/idUKTOR00201420070828?rpc=44

Over 60,000 Sept NEM calls traded so far today!

Bill - Re fewer posts of late - There may well be a correlation between short-term market direction and number of posts, especially from those seeking opportunities on the long side. Also, some individuals (especially those with a short-term trading horizon) may have become reluctant to post in view of previous complaints re "pollution".

Bill,
When a stock is in the accumulation zone en daily RSI breaks above 30, but after a several days again falls below 30 is this a falls breakout and should we sell the stock or should we hold it. In other words, can we use daily RSI 30 as a kind of stop-loss ?

I know you don’t have any Dutch stocks on your Cara list but here are three interesting stocks from Euronext Amsterdam in the Accumulation Zone:
-USG People (Yahoo Finance = USG.AS) at eur 23,65 with RSI D/W/M at 36,19/25,71/28,46.
In July the stock was trading around eur 37,50.
-Crucell (Yahoo Finance = CRXL.AS) at eur 14,39 with RSI D/W/M at 33,20/29,59/28,07.
-Ordina (Yahoo Finance = ORDI.AS) at eur 13,20 with RIS D/W/M at 35,32/15,48/30.

When talking about Petrochina today you still look at RSI-7 Daily dropping below 70 but I thought you had lowered your Daily RSI lines to 15-50 instead of 30-70 ?

Thanks again for your reply.

With the XAU looking like it just bounced downward off of the 200 day MA. Is this the calm before the fall for the miners? or is this the basing before a break through... (these are my thoughts for the last 2-3 trading days)

Hola from Dominical, Costa Rica!

I am on a backpacking vacation and having a blast. Costa Rica is one of the most beautiful and diverse countries I have ever visited. I recommend it highly (though the capital San Jose is a bit seedy) the beaches are beautful and the rainforest is incredible. Also very eco+friendly and a general reverence for mother nature! A pretty decent exchange rate taboot! I can go to dinner here with a few daquiris for half or less of what it costs me just for food in the US.

There are lots of Europeans down here traveling for their Ferragosto *midAugust thru first week of September vacation, so perhaps it is part of the reason for less posting lately.

Thanks to everyone who posts , its a great way to do a quick chronological market perusal as I stop in the internet cafe!

Also, Bill, I about spit my smoothie out while laughing at the title of your post today!
Pura Vida!

SLW-going to start accumulating here at 10.69

What'll it be 2nd? A reversal or continue to sell into the close? Feels weak to me. I think they want to see DOW 12,600 or so and 120 or so XAU, but it just turned 12 pdt and it looks to be trying to get off the floor. Small move, we'll see.

somehow i don't think there is enough fear right now to take it down...how much money have they drawn in from the sides over the past two weeks-i would wager not much....

Any thoughts on why SLW is dropping a lot more than other mining stocks?

End of day rabbit must be stuck in the hat....

The S&P went through support at 1440 pretty easily. This is not looking good, granted volume i light. End of day weakness is bear market trait. We will see what tomorrow brings.

If momentum continues to build double-bottom support at 1370 may not hold and small investors will really panic this time.

SLW may be dropping on missing estimates and silver underperforming gold. I will be a buyer under 9 where long term support is.

Is anyone suspicious of Wells Fargo computer problems over the weekend that prevented people from making withdrawals? That would be a good excuse to cover up solvency issues.

looks like mkt rout today. Maybe big dip in the morning will set up another short squeezw??? Any thots

Thanks for the comments on SLW. As I am new, I only remember last September when silver was breaking out before suffering a big breakdown, and again in October. With the Dow almost 300 points down, I'm in a pessimistic mood.

Bill it looks to me from these recent sedar filings for WGI we may see 12 million + shares up for sale. About 6 mill from NEM.
Can you comment please?
http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00025569

August 8th and 23rd filings for WGI.

Well well.....
I traded my plan today and when it started playing out I leaned into it a bit with a little SDS and DXD. I expect more of the same until we see the previous low. If we stop there I sell the ultras and buy my list. I'm not sure about PM's now as it isn't a sure deal we see the Fed cutting rates at the next meeting. If not the mkt will definitely throw a tantrum and take er' down even more and PM's will do the same so I'm looking for return.

I sold TM for a profit and am bottom fishing to reload. Have 1/3 position today. Hoping for $110. Holding PGH LT will buy more on any serious pullback.

Ugly close, over night will be telling.

close at the lows, but as bill points out, a lack of bids feels markedly different than panic selling...and as craig pointed out this morning, absent panic no compelling reason to buy...so i guess we have an ongoing game between buyers and sellers until one side caves in....

Bill there is 5 monts left to the year and your bullish for what the next 60 days? I am not sure I am following along here. Why bother to say "bullish" since this to me implies something longer than a 60-90 day time horizon, at least to me. Maybe this sort of thinking is more for the traders out there rather than long term oriented investors? I read your stuff and think why bother taking the risk for a possbile 60 day run only to have a bear start soon. I say this with the highest regard for your work.

Paul Farrell on a recent talk by David Walker, head of the GAO:

Excerpts:

"The Roman Empire lasted 1,000 years, but only about half that time as a republic. The Roman Republic fell for many reasons, but three reasons are worth remembering: declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government. Sound familiar?"

"Entitlement reform is especially urgent. Unless we reform Social Security, Medicare, and Medicaid, these programs will eventually crowd out all other federal spending. Otherwise, by 2040 our government could be doing little more than sending out Social Security checks and paying interest on our massive national debt."

Full story: http://tinyurl.com/24nu3g

Mark Hulbert's update on short-term timers suggests the market is more likely to rise than fall over the next few weeks:

http://tinyurl.com/ysylcf

for anyone following SWC, downgraded from hold to sell today by TSC:

"Miner of palladium, platinum and associated metal Stillwater Mining Company (SWC) has been downgraded to a sell from a hold. The historical performance of the company's stock has been generally disappointing, and its profit margins have been poor. Stillwater's net loss widened to $2.52 million in the second quarter of 2007 from $2.34 million a year earlier. The company has reported somewhat volatile earnings recently, and TheStreet.com Ratings believe it is likely to report a decline in the coming year."

geckojb,

Well, and nicely, said. Personally, in deep, and resonate with the caution of why try to catch the next rally when there could be a trainwreck.

In the past 5-6 yrs, since sept 2002, here are the very different returns on different asset classes:
emerging mkts: 28o %
developing intl: 140
small caps: 120
xau 100
.spx 80

(gfi 25..what a laggard!)

I'm not sure what this means. Global growth is going to outperform for many years? Are our large caps due to catch up? Have we just come too far?

When I draw a channel on a weekly chart over the past 5-6 years for .rua/russell 3000 it's not a pretty picture. Looks line we over shot the upper trend line and there's a long way to the bottom trend line. The powers that be may be putting the squeeze on the fed to make good on hope of lower overnight rates. As my simple mind hears it, the discount window is not being used since it's still more costly.

Some sectors remain above the 200dma: energy, oil services, and emerging mkts. Hope springs eternal.

Thanks Bill for the clarification. I will be watching the trend here seeing if we break down or can recover and at least break the cycle of lower highs.

In addition to the generalized weakness well documented throughout the day here, I noticed some of the same "dump the winners, buy up the weaklings" trades a la 2-3 weeks ago. Maybe some quant/hedge players are still deleveraging and forced into this unwind to maintain net market exposure.

With the down moves across-the-board this week so far, one may be tempted to rush in definitive judgements along with the media frenzy and the fall-like flow (I have been guilty of overreaction in the very recent past, and will likely fall under its spell in the future).

As noted before, we made this move on volume lower than last week (which was lower than the previous dreadful one); FETv experts and their mini-mes have been repeating ad nauseam that the correction is not over, that we need to retest, etc. Just like this market hit a perfect DJI 10% correction nearly simultaneously with Naz & SPX, today's action strongly suggest that we are on script to fullfil the expected re-test (and hoped-for double bottom formation). In a somewhat less bullish stance than Bill's ST, I would expect that the players will not deviate from the widespread expectations: re-test and rebound strongly. At this point, I am growing uncomfortable that the past two weeks (since Fed. intervention in truth) have been strictly by the book on decreasing participation. I don't trust markets that behave according to a pattern known and advertised by the majority. I would rather have a more disorderly tug-of-war between bulls & bearson stable-to-increasing volume.

JML

disclosure: no positions. SDS and TWM triggers were not reached yesterday (1,485+1,490 and 800+805 resp.)

ALOHA !!

Anybody have a Schwab account? Why did Charles Schwab sell 70% of his stock on 8/15?

Link: http://biz.yahoo.com/t/34/189.html

I do give insider trading at these volumes a lot of weight.

kaimu -

I don't know how you come up with Charles S. liquidating 70% of his holdings. I see from SEC Form 4 about 8% across the board liquidation likely for diversification.

http://tinyurl.com/3yn7wc

JML

Wow - took off for a long weekend since this was supposed to be the "slow week" and come back tonight to this carnage.

My biggest long term holdings are in Oil and gas stocks and I see Oil up about $0.40 from Friday's close and XLE is down over 3.5%. Nat gas down a bit, but not that much.

IMHO, the pressure is on for the fed to lower the discount rate..and i think they're going to do it..

21 period SMA on the 1-min TICKQ exceeded the lowest levels of Aug 16th and Aug 10th. -548.

A/D on the NASDAQ closed below the lowest levels of Aug 16th.

To me, that spells selling pressure. The big question to me for tomorrow is: Who's going to buy? and Why?

Wish I'd seen the '74 bear market... if Bill is right and there's no bid under this market, all that's left is offer -- which leads back to my question: to Whom?

AAPL continues to be the tell for me.

LOL OldGoat... "End of day rabbit must be stuck in the hat...."

Wow. Schwab sold 17 million shares on 8/15 for $350 million and is left with 8 million shares. That is a big red flag for me.

Thanks for the head's up Kaimu

What is the excuse - he is buying a house!

Here's a funny cartoon I found on my wanderings today: http://tinyurl.com/36fn4r

I've found that there's a popular wisdom in humor; I've often maintained that Johnny Carson's monologue caught the pulse of the country better than any "Executive Summary" which might land on a president (or Fed Reserve chairman's) desk.

CEO Barrick,> BOE tried to destroy gold mining!

"(But) The industry has really struggled from a lack of investment," he said. "It's fine to talk about great gold prices for the last couple of years, but the Bank of England tried to put the gold mining industry out of business back in 1999 and there was very little adjustment for many years."

http://www.reuters.com/article/marketsNews/idUKN2827949720070828?rpc=44&pageNumber=1

Late night Stock market hypothesis.
The fed will do everything it can to prevent a stock market collaspe while trying to protect the dollar. If there current plan of injecting liquidity in the market does not work, the fed will end up having to sacrifice the dollar by reducing interest rates.

The current support level for the DOW is between 12600 and 12000. If this support is broken we may see a free fall in the markets. AT this point brokerages and hedge funds will be liquidating everything they have to pay debt, since these funds are very heavily leveraged.

Thus, the fed will be getting extremely nervous as the DOW gets close to the 12000 support level. At this time or just before this happens the fed will make a statement to reduce interest rates. If the fed acts fast a 25 basis points reduction might stop the market free fall, however the longer the fed waits a more drastic cut will be needed.

In conclusion, the reduce interest rate environment may cause investors to exit the treasury bill and start buying gold.

JMHO

ALOHA !!

Jumble ... Apparently Edgar Online is mistaken about share ownership or SEC is ...???

At any rate, scrolling down the record of shares sold going back to 2005 the amount of shares Schwab sold on 8/15 is almost 42 times higher than the average(390,000) over the past two years. You may rationalize it as "diversification" but I see it as a red flag and something as out of the ordinary that should be reported to this community.

"I remember 1973-74 was much like that".

Posted by Bill Cara at August 28, 2007 3:48 PM

Bill, do you recall the resistance level going into 1973 on the gold contract?

Best of luck,

The CoinGuy

Omphalos, your cartoon was GREAT!

Thank you for posting it.